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2017 CMPs Issued by CMS

Marc Ryan | April 11, 2018

The Centers for Medicare and Medicaid Services (CMS) recently posted Civil Monetary Penalties (CMPs) for 2017 and the trend toward rigorous compliance enforcement continues. 


Click here for recent CMP notices and suspensions.

Here are some statistics regarding CMPs and suspensions in the past four years showing the continued impetus toward holding plans accountable for all regulations:

  • Since January 1, 2014, CMS issued 119 CMPs or suspensions totaling $28.5M in CMP sanctions
  • In 2017 alone, CMS issued $7.4M in CMPs or suspensions. This illustrates a slight increase from the previous average of $7.0M a year from 2014 to 2016
  • CMS reports that there were 38 CMPs or suspensions in 2017. This also is an increase from the average of 27 per year from2014 to 2016
  • In 2017, three plans received suspensions, compared with 3.33 on average per year from 2014 to 2016

The breakdown of the 38 total actions in 2017 is as follows: 

  • 18 MA-PD or PDP plans received CMPs or suspensions due to program audits in 2017
  • 3 PACE organizations received suspensions or CMPs
  • 3 CMPs were issued for inordinate IRE auto-forwards due to untimeliness for either coverage determinations or redeterminations (two for the same plan)
  • 1 plan received a suspension for not abiding by the 85% minimum medical loss ratio requirement
  • 2 for Annual Notice of Change (ANOC) inaccuracies/errors
  • 11 MA-PD or PDP plans received CMPs or suspensions due to program audits in 2016 

Here are the major findings for CMP-sanctioned plans from program audits conducted in 2017:

Formulary Administration violations:

  • Failure to properly administer its CMS-approved formulary by inappropriately rejecting formulary medications
  • Failure to properly administer its CMS-approved formulary by applying unapproved utilization management practices
  • Failure to properly administer its CMS-approved formulary by applying unapproved prior authorization edits
  • Failure to properly administer its CMS-approved formulary by applying unapproved step therapy edits and/or criteria
  • Failure to properly administer its CMS-approved formulary by applying unapproved quantity limits
  • Failure to properly administer its CMS-approved formulary by approving unapproved quantity limits
  • Failure to provide transition supplies
  • Failure to properly effectuate approved prior authorizations
  • Failure to properly effectuate approved exception requests

CDAG violations:

  • Misclassified coverage determination requests as grievances or customer service inquiries
  • Misclassified redeterminations (appeals) as initial coverage determinations
  • Failure to demonstrate sufficient outreach to prescribers or enrollees to obtain additional information necessary to make appropriate clinical decisions
  • Failure to auto forward coverage determinations and/or redeterminations (standard and/or expedited) that exceeded the CMS required timeframe to the Independent Review Entity (IRE) for review and disposition

 ODAG violations: 

  • Failure to correctly determine whether the issues in enrollees' complaints met the definition of inquiries, grievances, organization determinations, appeals, or a combination of the preceding
  • Failure to follow required procedures after receiving expedited organization determination requests resulting in the incorrect processing of enrollees’ requests for expedited medical coverage under the standard timeframe.
  • Failure to classify enrollees’ payment appeals as reconsiderations
  • Failure to provide remittance advice/notices that include a description of the appeals process or include copies of, or links to, the WOL for denied requests for payment from non-contracted providers
  • Failure to hold enrollees harmless for items or services delivered by providers referred by contract providers
  • Failure to comply with cost sharing requirements by charging incorrect copayments and then not refunding amounts incorrectly collected for Part C
  • Inappropriately denied claims from contracted providers
  • Denials of payments for emergency medical services resulting in inappropriate denial for enrollees’ claims for out-of-network emergency room visits 

A few trends: 

  • There seems to be slight improvement in some of the areas that were most concerning in previous findings:
    • Timeliness
    • Use of appropriate letter templates and appeal rights
    • Use of clear and concise verbiage in letters
    • Misclassification of cases
    • Consistent use of evidence-based criteria
    • Outreach
  • Performance on Formulary Administration, and implicitly PBM performance, remains a major concern
  • CMS is increasingly going to the esoteric, sanctioning for the following: inappropriate claims payment, inappropriate cost-sharing, and other beneficiary-harm and hold-harmless provision violations 

Important to note here is the concentration on the inordinate number of auto forwards.

As stated, CMS issued three CMPs for inordinate auto forwards related to the IRE monitoring program announced in late 2016. What is more important to note is that plans also are now being sanctioned on audit for not auto forwarding enough. 

The message from CMS: comply with the regulation and auto forward all untimely cases, or if we find additional cases during a program audit, your CMP will be much larger!

CMS, CDAG, Centers for Medicare and Medicaid Services, Civil Monetary Penalties, ODAG, Formulary Administration, CMP

About The Author

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs, and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel. Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management and administration.

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